The New York Department of Financial Services has published proposed rules governing Buy Now, Pay Later (BNPL) financing plans operating in the state.
The proposal, among other things, would require BNPL providers to register with the state. The regulations implement a law signed by Governor Kathy Hochul as part of her FY26 budget plan.
Some states have been studying how to fill a void created in May, when the CFPB said it no longer would prioritize enforcement of BNPL rules. And advocates say that New York law could provide a model for BNPL enforcement.
“Too many New Yorkers have learned the hard way that some ‘Buy Now, Pay Later’ products are designed to trip them up with junk fees and overly burdensome fine print instead of helping them build a stable financial future,” Hochul said, in announcing the rules. “These new nation-leading regulations ensure that lenders know we have clear disclosures, limits on fees and real oversight so families don’t get pushed into a debt spiral while big financial companies cash in.”
“This regulation will govern how ‘Buy Now, Pay Later’ companies operate in the state, protecting New Yorkers from excessive fees and the misuse of personal data, while ensuring transparent loan terms and a fair process for resolving disputes,” New York State Department of Financial Services Acting Superintendent Kaitlin Asrow, said.
The regulations will implement the law by:
- Establishing a licensing and supervision framework for any businesses engaged in BNPL activity in New York.
- Prohibiting excessive fees, including convenience charges.
- Limiting late fees and other penalty fees.
- Requiring lenders to make it clear if loans will be reported to credit reporting agencies.
- Establishing rules for timely resolution of consumer disputes.
- Governing how consumer data can be used, in an effort to limit misuse or exploitation.
A 60-day public comment period will begin when the proposed regulation is published in the New York State Register. The law and regulation will take effect 180 days after a final rule is adopted, with an additional transitional period for those already offering BNPL loans in New York.